Second-quarter earnings at Cathay General Bancorp in Los Angeles fell 22.9% to $34.8 million from a year earlier on a triple-digit spike in chargeoffs.
Earnings per share at the $13.4 billion-asset holding company for Cathay Bank were 44 cents, versus 56 cents in the year-earlier quarter.
Total loans rose 11.2% to $10.3 billion, but net chargeoffs rose 187.2% to $7.6 million, mainly on commercial loans. The company reduced its loan-loss allowance by 20% to $123 million.
Net interest income before the provision for credit losses rose 7.4% to $101.8 million. Deposits rose 12.1% to $10.5 billion.
The net interest margin was 3.38%, versus 3.51% in last year’s second quarter. “The decrease in the net interest margin was due to a combination of the impact of the special Federal Home Loan Bank dividend and higher interest recoveries in the prior year and higher interest bearing deposits at the Federal Reserve Bank this year,” the company said in a press release Wednesday.
Noninterest income rose 61.2% to $9.1 million “primarily due to $3.3 million of net securities losses recorded in the second quarter of 2015,” the company said.
Noninterest expense rose 44.7% to $68.8 million, partly because of a $20.8 million increase in investments in alternative energy during the quarter.
Cathay General announced on July 8 that it had agreed to buy SinoPac Bancorp from Bank SinoPac in Taiwan for $340 million.